The proposed bill introduces the "Housing Flexible Spending Account Act of 2025," which aims to establish a state-administered program that enables Rhode Island employers to contribute to a housing flexible spending account (H-FSA) for their employees. This program is designed to assist employees with qualified housing expenses, including monthly rent or mortgage payments, down payments for first-time homebuyers, utilities, and property taxes, while ensuring fiscal responsibility for the state.

Employers with fewer than fifty employees can voluntarily participate in the program, provided they contribute a minimum of $5,000 annually for all eligible employees, who must earn $125,000 or less per year. Contributions made by employers will be treated as pre-tax benefits and will not be subject to Rhode Island state income tax. Employee contributions to the H-FSA program are not permitted, as the program is entirely employer-funded.

The bill includes compliance and enforcement measures to ensure that employers do not reduce employee wages as a condition for making H-FSA contributions. Employers found in violation of these requirements may face penalties, including repayment of tax benefits and fines. The Rhode Island Department of Labor and Training will establish verification procedures to ensure compliance with contribution requirements.

The program will commence with a two-year pilot phase, during which data will be collected on participation rates, economic impact, and effectiveness. The Department of Revenue will submit annual reports to the General Assembly detailing the program's performance, fiscal impact, and recommendations for adjustments. The act is set to take effect on January 1, 2026.